September 24, 2015

Office of Regulations and Interpretations

Employee Benefits Security 

Administration

Attn: Conflict of Interest Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

RE: RIN 1210-AB32 – Conflict of Interest Rule

Dear Sir or Madam,

The American Benefits Council (the “Council”) is pleased to have the opportunity to 

provide comments on the Department of Labor’s (the “Department”) proposed new 

definition of fiduciary investment advice, also known as the conflict of interest rule. The 

Council is a public policy organization representing principally Fortune 500 companies 

and other organizations that assist employers of all sizes in providing benefits to 

employees. Collectively, the Council’s members either directly sponsor or provide 

services to retirement and health plans that cover more than 100 million Americans. 

We very much appreciated the opportunity to testify at the hearing. In our view, the 

dialogue between the Department and the witnesses during the hearing was very 

constructive and helpful. The four-day hearing is a tribute to the Department’s 

openness to input on this critical set of issues. We look forward to continued dialogue 

with the Department.

We also really appreciate your statements during the hearing that it was not the 

intent of the Department to turn entities that sell health and welfare insurance policies 

or private exchange services into fiduciaries and they would not be covered by the rule.

As stated in our July 10 comment letter, a formal and definitive clarification of this 

important issue would be beneficial to all parties.
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We wanted to follow up on the excellent questions posed to us by Department 

officials in the question and answer period following our testimony. Our thoughts on 

those questions are set forth below. 

The concern from our plan sponsor members that the proposal could cover casual 

remarks by plan sponsor employees or call center personnel. 

CALL CENTERS

Issue:

Our plan sponsor members have expressed concern that the current language of the 

proposal brings informal exchanges of information and casual statements by plan 

sponsor employees or call center personnel within the definition of fiduciary advice, 

creating fiduciary exposure and, in the case of the call centers, prohibited transactions. 

For example, assume that a participant asks a human resources employee of the plan 

sponsor whether the investment options he selected seem to be the type of investments 

that other similarly situated employees choose. The human resources employee 

responds by saying that she is not an expert by any means but the investments do seem 

similar to what others have chosen and seem to make sense. 

Is this a recommendation?

Under the proposal, the definition of a recommendation is “a communication 

that . . . would reasonably be viewed as a suggestion that the advice recipient engage in 

or refrain from taking a particular course of action” (emphasis added). The statement by 

the human resources employee could be viewed as a suggestion that the participant go 

forward with his selected investment options. The selected options make sense and are 

similar to what others are doing. That seems to clearly fit within the definition of a 

recommendation. 

The advice relates to the advisability of acquiring securities and is individualized (or 

at the very least is “specifically directed to” the participant). These elements of the 

investment advice definition under the proposal seem clearly satisfied.

The advice is provided “for consideration.” Almost any statement is provided for 

consideration, and this statement is not an exception. 

How to address this issue:

Our plan sponsor members are very concerned that under the proposal, the casual 

conversation and exchange of information described above would be treated as the 

provision of fiduciary advice by the human resources employee, subjecting the 
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employer to likely indemnification obligations and co-fiduciary liability, an outcome 

that would unduly restrict plan participants’ access to information about the choices 

available under their plan. During our testimony, we provided additional examples 

which we believe raise the same concerns and which further reflect the breadth of the 

problem and the need to address the issue. During the question and answer period 

following our testimony, we were asked how to address this issue. We believe that this 

likely unintended result can be addressed though two clarifications of the proposal. 

 Excluding casual conversations: The definition of fiduciary advice should clarify 

that casual conversations not involving any expectation of material reliance are 

not fiduciary advice. Thus, in our view, a fiduciary relationship should not be 

treated as existing unless: 

o Based on the circumstances, it is clear both parties understand that an 

individualized recommendation is being provided in connection with a 

plan or IRA that:

 Will play a significant role in the recipient’s decision-making, and 

 Reflects the considered judgment of the advisor. 

Under the proposal, any “suggestions” offered “for consideration” are 

sufficient to trigger fiduciary status. This is too low a bar and too broadly 

defined. In order for communications to be considered fiduciary advice, they 

need to be more than the provision of general information about what others 

have done or offhand suggestions by the advisor; they need to be reasonably 

viewed by both parties as intended to be relied on in proposing a specific action 

and as reflecting the “considered judgment” of the advisor. The rule should not 

cover general information about the plan or other communications offered for 

casual consideration or that provide basic guidance; it should include only 

information provided in a context where the advisor would reasonably expect 

the recipient to place significant reliance on the information to take a specific 

action. As we noted in our discussion at the hearing, the provision of illustrative 

examples may be very helpful.

 “For a fee or other compensation”: During the question and answer period after 

our testimony, we were asked if it would help for the Department to (1) clarify 

that employees of a plan sponsor who are not paid any extra compensation with 

respect to advice are not giving fiduciary advice because they are not receiving 

“a fee or other compensation” for any advice given, and (2) provide the same 

clarification regarding call center employees. These clarifications would be 

extremely helpful and would be very much welcomed by our plan sponsor 
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members. This would address a whole set of potential issues that our plan 

sponsor members are concerned about.1

o Our technical concern: We had not read the proposal in the manner 

described in the question posed to us, especially because Proposed 

Regulation § 2510.3-21(b)(2) provides a special carve-out for certain plan 

sponsor employees who only receive their normal compensation. There 

would be no need for the special carve-out and certainly no reason to limit 

the carve-out to certain plan sponsor employees if plan sponsor 

employees only receiving their normal compensation cannot be fiduciaries 

due to the “fee or other compensation” requirement. So we ask for the 

special carve-out to be deleted and replaced with a clarification that no

plan sponsor employee would be a fiduciary with respect to assistance 

provided to a participant, beneficiary, or plan fiduciary unless such 

employee receives additional compensation for the assistance. As noted, 

this would apply to all plan sponsor employees, including, for example, 

human resources employees responding to questions and managers 

providing requested assistance to employees working for them. 

o Application to call center personnel: During the question and answer 

period following our testimony, the point was made to us that call center 

personnel may be treated as receiving a fee or other compensation where 

they receive additional compensation based on referrals of participants to 

providers or specific investment products. 

 It should be clarified that referral fees would not make call center 

personnel fiduciaries if the referral fees are only for referrals to 

service providers that provide education, rather than fiduciary 

advice. 

 Also, as noted above, it would be extremely helpful if it could be 

clarified that if call center personnel simply receive their normal 

compensation and do not receive additional compensation that is 

based on the choices that participants make or for referring 

participants to an investment product or fiduciary service, such 

personnel are not receiving “a fee or other compensation” and thus 

are not giving fiduciary advice. Call center assistance is very 

important to our plan sponsors, so this type of clarification would 

provide great help. 

 

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The “fee or other compensation” is a much broader issue with effects in many contexts. Our focus in this 

letter is primarily on the two issues posed to us at the hearing, both of which are very important to large 

plan sponsors. 
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o Additional clarification needed regarding call centers: In order for such 

a call center clarification to have the desired effect, the compensation 

received by the financial institution employing the call center employee 

must also not trigger fiduciary status for the financial institution. In other 

words, unless call center personnel are acting on directions from the 

financial institution, compensation received by the financial institution in 

connection with the assistance provided by the call center should not 

cause the financial institution to be treated as having received a fee or 

other compensation for that assistance.

 If this point is not included in the rule, clarification about the call 

center employee has little beneficial effect. In other words, if the 

call center employee suggests consideration of an investment 

offered by the financial institution, and the financial benefit flowing 

to the financial institution is deemed to be a fee or other 

compensation (despite the fact that the call center employee 

receives no direct benefit and therefore should not be construed to 

have a potential conflict of interest), then the financial institution is 

a fiduciary. If the financial institution is a fiduciary, then assistance 

by the call center employee would generally be a prohibited 

transaction. This would mean in turn that the financial institution 

would need to instruct the call center employee not to provide the 

assistance. So nothing would be gained by clarifying that the call 

center employee does not receive a fee or other compensation.

o Application to additional areas: As noted in Footnote 1, the fee or other 

compensation issue has broad implications beyond just plan sponsor 

employees or call center personnel. For example, trade association 

employees answering investment and distribution questions from plan 

sponsor members could be treated as fiduciaries if DOL were to take the 

position that part of the trade association’s dues is for the trade association 

to be responsive to member questions. This clearly inappropriate result 

can be addressed by applying the plan sponsor employee rule to all 

service providers – in the absence of additional pay for the advice, the 

advice is not for a fee or other compensation and thus is not fiduciary 

advice. 

o Related issue: The trade association issue noted above raises for us a 

related issue. Retirement trade associations commonly ask industry 

experts to speak to their members, including investment experts. If such 

an expert were to address a group, any discussion about investment 

trends or patterns would not be individualized and thus would not be 

treated as fiduciary advice. But if a trade association member were to ask 
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a follow-up question after the presentation, any answer would be 

individualized and could be treated by DOL as being for a fee or other 

compensation if it leads to work with the expert. This is an inappropriate 

and we believe unintended result, which would inhibit the healthy 

exchange of ideas at industry meetings. We ask that informal discussions 

at trade meetings among parties with no existing relationship not be 

subject to the fiduciary rule. Such a rule would reflect the reality that there 

is no reliance on casual give and take after a public program. 

INVESTMENT EDUCATION

The proposal:

The Department’s proposal would significantly restrict the type of investment 

education that can be provided without triggering fiduciary status and the prohibited 

transaction rules. Under current law (as reflected in Interpretive Bulletin 96-1), 

education includes (1) guidance on the extent to which an individual should invest in 

different asset classes (such as large and small cap equity funds, and long and shortterm bond funds) based on her age, other retirement savings, and other factors, and (2) 

examples of investments that fit within such asset classes. This definition of education 

has worked very well for nearly 20 years and was permitted under the 2010 Department 

proposal. Under the 2015 proposal, providing examples of investments that fit within 

asset classes would, however, cause this kind of education to become fiduciary advice. 

This would severely limit the scope and usefulness of education programs that would 

be limited to abstract conversations about asset classes using terms – like large cap 

equity funds – that participants may not understand or find useful because they are not 

able to associate them with the investment choices they are offered.

Our view:

We believe that Interpretive Bulletin 96-1 has been a huge success, and should be 

preserved (as recognized by the 2010 Department proposal) and updated to ensure that 

the Interpretive Bulletin still works with respect to vital communications. As under the 

proposal, the principles of Interpretive Bulletin 96-1 should be extended to apply to 

assistance provided to plan sponsors and IRA owners, and with respect to distributions 

and rollovers.

Question posed to us:

At the hearing, we were asked for our views about addressing the investment 

education issue in the following manner: in the context of retirement plans (as opposed 

to IRAs), education could include (1) recommendations regarding asset classes, and (2) 
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a list of all plan investment options in the recommended asset classes. Set forth below 

are our thoughts on that approach. 

 Concerns about possible additional requirement: First, at some points during 

the hearing it was suggested that in order to qualify as education, the type of 

assistance described above would need to be provided by an organization or 

person who has no financial stake in the plan investment options. Such a 

requirement would not be workable or appropriate. 

o The requirement is not workable because most providers of education are 

service providers that (1) provide education without any separate charges, 

and (2) can earn different amounts with respect to different investments, 

giving them a financial stake in the plan investment options. 

o Applying such a requirement is not appropriate because there is no reason 

to restrict any person from simply listing all plan investment options in a 

particular asset class. 

 Response to the question: Assuming that the additional requirement described 

above is not applied, we would suggest consideration of the following issues in 

crafting a workable framework. In some cases, requiring the identification of all 

plan options in an asset class would work very well, provided that only 

designated investment alternatives are taken into account (as opposed to options 

available through a brokerage window, for example). Most companies have 

moved to having a short list of investment options, and in such cases we see no 

problem listing all options in a particular asset class. 

However, in some cases, plans will have an extensive list of designated 

investment alternatives. In such cases, it could be counterproductive to list 50 or 

75 available large cap funds, for example. An emerging body of research 

indicates that addressing too many choices actually limits individual’s 

willingness to make choices. Participants seeing such an extensive list might 

simply put the communication aside rather than try to work through a list of 75 

funds. 

We continue to believe that the current rule in Interpretive Bulletin 96-1 

should be preserved. We did not see anything in the Department’s Regulatory 

Impact Analysis documenting that there have been any problems under 96-1. If 

the Department has concerns about the use of examples, a more targeted rule 

should be considered. For instance, 96-1 could be modified to provide that if 

fewer than three examples are provided with respect to any asset class, one of the 

following two conditions must be met: (1) the examples represent all plan 

investment options in that asset class, or (2) the examples are selected in a 
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manner that is not based on the financial interest of the organization or person 

providing the education.

Important additional point:

Our plan sponsor members have specifically raised one point of concern. Even if 

they list all plan investment options in an asset class or a significant number in a class, 

some plan sponsors find it very helpful to explain each asset class in the context of a 

particular option. For example, education might include the four large cap funds 

offered by a plan. But many participants do not know what a large cap fund is. So a 

plan sponsor may explain what a large cap fund is by using one large cap fund as an 

example, then also listing the other three large cap funds available under the plan. This 

practice was highlighted to us as an important element of the education process, which 

should be preserved as education under the new rule.

CONCLUSION

The fiduciary proposal raises many issues for plan sponsors, participants and those 

providing services to support the plans which involve potential significant additional 

costs and liabilities. We think these issues need to be addressed so that the proposed 

rules do not inadvertently hurt participants and undermine the voluntary private 

employer-sponsored system that provides enormously important and valued 

retirement security. 

We very much appreciated the opportunity to testify at the hearing and would 

be happy to discuss further any of the issues raised in our comment letters, our 

testimony, or this letter.

If you have any questions, please contact the undersigned at 202-289-6700 or 

ldudley@abcstaff.org. Thank you for considering the issues outlined in this letter. 

Sincerely, 

Lynn Dudley

Senior Vice President,

Global Retirement and Compensation Policy